Adani Wilmar Q4 Results: Revenue Jumps 40%, But Margin Contracts

Adani Wilmar Ltd.'s fourth quarter revenue rose fuelled by higher edible oil prices due to the ongoing Russia-Ukraine conflict, even as it hurt the company margin.

Consolidated revenue of the 'Fortune' brand edible oil maker rose 40% to Rs 14,960.37 crore in the quarter-ended March, according to its stock exchange filing.

In what is Adani Wilmar's first earnings disclosure to the exchanges since its market debut in February this year, the company said its annual turnover rose 46% to Rs 54,213.55 crore, aided by revenue in the edible oil segment. It became the second FMCG company after Hindustan Unilever Ltd. to cross the Rs 50,000 crore turnover mark.

Highlights (YoY)

• Edible oil business grew 41% to Rs 12,415 crore, while the food business rose 49% to Rs 757 crore.

• Operating profit rose 21% to Rs 425.72 crore.

• Net profit fell 26% to Rs 234.3 crore on higher tax expenses.

• Margin stood at 2.8% vs 3.3%.

• Volume grew 16% to 1.29 million metric tonnes.

• Cost of materials consumed rose 40% to Rs 13,666.20 crore.

“We have delivered steady growth in spite of the challenging macro environment,” Angshu Mallick, managing director and chief executive officer at Adani Wilmar said in a company statement.

While Covid-19-led supply chain bottlenecks started easing after the second quarter of FY22, the risks then shifted to the ongoing geopolitical tension, higher commodity prices, and interest rate hikes by the U.S. Fed, he said.

Rural Demand Takes A Hit

Sustained inflation across edible oil has hit consumption, particularly in the hinterlands, Mallick said in a post-earnings conference call.

Crude palm oil is being offered at around $1,950 per tonne including cost, insurance and freight, up from $1,042 a tonne in June last year, he said. Similarly, soyabean oil prices rose from $1,196 per tonne to $1,770 per tonne, while sunflower oil prices shot up 66.5% to $2,100 a tonne at the end of March.

“While the rural market is the growth driver, inflation has impacted demand. We expect rural demand to remain tepid in the medium term," he said.

Future Roadmap

Adani Wilmar plans to expand capacities aggressively in the food business.

“Going forward, we will focus more on inorganic growth and strategic investments in the food space," Mallick said. The company is also looking at capacity addition in rice, wheat flour, pulses and besan.

The company launched Fortune Poha, two variants of ready-to-cook Khichdi, and Fortune Total Balance oil (a 3-in-1 blended oil) in FY22. “These launches are in line with the focus on expanding the value-added foods basket with health and wellness,” he said.

In a bid to strengthen its manufacturing footprint in the food segment, Adani Wilmar acquired a rice mill in Burdwan, West Bengal. “With all these efforts, we expect volumes in the food business to grow from 11-12% in FY22 to 20% in FY23.”

Adani Wilmar added 28 Fortune Mart stores in FY22, taking the total count to 33, with plans to add 100 more stores.

Fortune Mart is a franchise physical store to showcase Fortune-branded products. It also serves as fulfillment centres for home delivery of products ordered through its D2C channel: Fortune Online. The direct-to-consumer platform is currently available in 25 cities.

Adani Wilmar's flagship brand Fortune commands an 18.8% market share in India, according to its investor presentation. It reaches 90 million households, indicating that one out of every three households consumes a Fortune product, the company claims.

The company has 22 plants in India located across 10 states, comprising 10 crushing units and 19 refineries. Adani Wilmar's refinery in Mundra is the largest with a capacity of 5,000 tonnes per day.

Shares of Adani Wilmar fell 5.07% in the last five consecutive days compared with a 0.2% loss in the benchmark Nifty 50. The stock, however, rose multiple times since its IPO, going from Rs 221 in February to Rs 878 in April.